Yellow metal strikes new record high

Bullion metals rise due to shaky economic data

Bullion metal prices ended substantially higher on Thursday, 17 June 2010 at Comex. Prices rose as mixed economic data hit Wall Street today, which cautioned investors regarding the movement of equities in near term. Precious metals are often viewed as good alternates for investment in a fluctuating market.



Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies and also vice versa. Recently, the embattled euro has played stronger role in moving prices rather than dollar fluctuation. Bullion metals have registered increase in prices despite strong dollar in recent times and vice versa.

On Thursday, gold for August delivery ended at $1,248.7 an ounce, higher by $18.2 (1.5%) an ounce on the New York Mercantile Exchange. Prices rose to a high of $1252.5 earlier in the session. This was a new closing high for the yellow metal. Last week, gold ended higher by 1%. Prices had touched an all time high of $1,249.7 on 14 May 2010 before Thursday.

Gold for June delivery had settled above $1,200 in early December 2009, only to pull back to $1,172 area and dip as much as the $1,050 vicinity in early February 2010. Gold ended May higher by 3%. For the month of April, gold ended higher by 6%. For the first quarter of this year, gold rose by 1.7%, its sixth quarterly rise. On a year to date basis, gold is higher by 13.8%.

On Thursday, July Comex silver futures ended higher by 33 cents (1.8%) at $18.77 an ounce. Last week, silver ended higher by 5.4%. For May, silver shed 1.1%. For the month of April, silver ended higher by 4.1%. For the first quarter of this year, silver rose by 3%. On a year to date basis, silver is higher by 9.5%.

Among economic reports scheduled for the day, The Labor Department in US reported on Thursday that first-time applications for state unemployment benefits rose by 12,000 last week to a seasonally adjusted 472,000, providing further evidence that U.S. labor markets remain very weak. The jobless claims report shows that the level of layoffs, while down from the peak a year ago, is too high to be consistent with robust job growth. The economy is creating jobs, but too few to bring the unemployment rate down meaningfully. Initial claims are down about 24% compared with the same week a year ago but are unchanged since the first of the year. Continuing claims are down about 29% compared with a year ago and down about 9% since the first of the year.

Also, the Labor Department said the consumer price index fell 0.2% in May, with core prices advancing 0.1%, as expected. Separately, the Conference Board said the index of leading economic indicators rose 0.4% in May, signaling softer growth ahead. Finally, the Philly Fed index fell to 8 in June from 21.4 in May, a sign that growth in the manufacturing sector in the region could be softening.

US stocks traded flat in the early part of the session today but ultimately managed to end modestly higher.

Gold had ended FY 2009 higher by 24%. Silver futures had ended 2009 up 50%. The dollar index had lost 4.2% against its counterparts last year.

Last year, after hitting a low at $807.30 per ounce on 15 January 2009, gold futures rallied almost 51% to hit an all-time high at $1217.40 per ounce during early December of 2009 but fell from those levels at the end. Silver futures had hit a low at $10.42 on 15 January 2009 and hit a high at $19.30 per ounce on 2 December 2009. Like gold, silver also ended lower than its all time high level.

At the MCX, gold prices for August delivery closed higher by Rs 157 (0.84%) at Rs 18,787 per ten grams. Prices rose to a high of Rs 18,825 per 10 grams and fell to a low of Rs 18,625 per 10 grams during the day's trading.

At the MCX, silver prices for July delivery closed Rs 274 (0.93%) higher at Rs 29,489/Kg. Prices opened at Rs 29,223/kg and rose to a high of Rs 29,620/Kg during the day's trading